Tag: tenants in common
It is often said that an Attorney for Property can do anything on behalf of the grantor’s behalf except make a will. This is on account of section 7(2) of the Substitute Decisions Act (the “SDA“), which provides:
“The continuing power of attorney may authorize the person named as attorney to do on the grantor’s behalf anything in respect of property that the grantor could do if capable, except make a will.” [emphasis added]
Although at first glance it would appear that the potential tasks that an Attorney for Property could complete on behalf of a grantor are almost absolute, with the Attorney for Property being able to do anything on behalf of the grantor except sign a new will, in reality the tasks that an Attorney for Property may complete relative to the grantor’s estate planning is more restrictive than this would suggest at first glance. This is because the definition of “will” in the SDA is defined as being the same as that contained in the Succession Law Reform Act (the “SLRA“), with the SLRA in turn defining “will” as including not only typical testamentary documents such as a Last Will and Testament or Codicil, but also “any other testamentary disposition“. As a result, the stipulation that an Attorney for Property can do anything on behalf of the grantor “except make a will” would include not only a restriction on the Attorney for Property’s ability to sign a new Last Will and Testament or Codicil on behalf of the grantor, but also a restriction on the Attorney for Property’s ability to make “any other testamentary disposition” on behalf of the grantor.
It is fairly common for individuals such as spouses to own real property as joint-tenants with the right of survivorship. When one joint-owner dies ownership of the property automatically passes to the surviving joint-owner by right of survivorship, with no portion of the property forming part of the deceased joint-owner’s estate. Although such an ownership structure may make sense when the property is originally purchased, it is not uncommon for circumstances to arise after the property was registered (i.e. a divorce or separation) which may make one of the joint-owners no longer want the property to carry the right of survivorship. Should such circumstances arise, one of the joint-owners will often “sever” title to the property so that the property is now held as tenants-in-common without the right of survivorship, making efforts to attempt to ensure that at least 50% of the property would form part of their estate should they predecease the other joint-owner.
Although severing title to a property is fairly straight forward while the owner is still capable, circumstances could become more complicated should the owner become incapable as questions may emerge regarding whether their Attorney for Property has the authority to sever title to the property on behalf of the grantor, or whether such an action is a “testamentary disposition” and therefor barred by section 7(2) of the SDA.
The issue of whether an Attorney for Property severing title to a property is a “testamentary disposition” was in part dealt with by the Ontario Court of Appeal in Champion v. Guibord, 2007 ONCA 161, where the court states:
“The appellants argue that the severing of the joint tenancies here constituted a change in testamentary designation or disposition and is therefore prohibited by s. 31(1) of the Substitute Decisions Act because it is the making of a will.
While we are inclined to the view that the severance of a joint tenancy is not a testamentary disposition, we need not decide that question in this case. Even if it were, we see no error in the disposition made by the application judge, because of s. 35.1(3)(a) of the Substitute Decisions Act.” [emphasis added]
Although the Court of Appeal does not conclusively settle the issue in Champion v. Guibord, the court appears to strongly suggest that they are of the position that an Attorney for Property severing a joint-tenancy is not a “testamentary disposition” within the confines of the SDA.
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In a recent decision of the Queen’s Bench of Alberta, Verhulst Estate v. Denesik, 2016 ABQB 668, the Honourable Madam Justice Shelley considers whether a tenant in common can acquire another tenant in common’s interest through adverse possession.
Given the limited case law on this issue in Alberta, Madam Justice Shelley reviews the existing case law in the other Canadian provinces, including Ontario.
Mr. Denesik and Mr. Verhulst, were business associates who acquired three parcels of land as part of a joint venture in 1995. The parcels consisted of a 159 acre woodlot (the “larger parcel”), and two smaller river lots totalling 96 acres (the “river lots”). Denesik and Verhulst held title to all three parcels as tenants in common.
Denesik and Verhulst began logging the three parcels, and the proceeds from the logging operation were used to pay off the mortgage secured against the parcels. The logging operation ceased in or around 1996. Shortly thereafter, Denesik moved a mobile home onto the larger parcel. Denesik did not pay anything to Verhulst for his use and occupation of the property, however, he did pay the property taxes up until 2015. Verhulst lived in the city with his family, and held his interest in the parcels as an investment without in any way occupying the parcels.
Verhulst passed away in 2008. Verhulst’s Estate applied for an order of partition and sale in relation to the three parcels. Denesik then applied for a declaratory judgment for title to the land, based on a claim in adverse possession.
At First Instance
The matter was heard at first instance by Master Schlosser, who concluded there was no time at which Verhulst was dispossessed and Denesik ’s action of putting a trailer onto a portion of the larger parcel in 1996 was insufficient to establish a claim to the entirety of the larger parcel, much less the river lots [See, Denesik v Verhulst Estate, 2016 ABQB 36].
Denesik appealed the decision. The main issue for consideration on the appeal, not specifically addressed by the lower court, is whether a tenant in common can acquire another tenant in common’s interest through adverse possession.
Justice Shelley noted that Alberta was the only province in Canada (with the exception of Quebec) which did not have specific legislation enabling an adverse possession claim.
In Ontario, s. 11 of the Ontario Real Property Limitations Act, R.S.O. 1990 c L-15, provides a legislative scheme, which sustains adverse possession claims as between joint tenants or tenants in common [para 32]. See, Zigelstein v. Stobinski (1985) 51 O.R. (2d) 562.
In the absence of legislation enabling adverse possession in Alberta, Justice Shelley was required to consider the issue in the context of the Torrens land titles system. Ultimately, she found that given Alberta’s lack of explicit authorization for a claim between tenants in common, it would be extremely difficult if not impossible, to establish such a claim in Alberta [para 51].
Citing the Ontario decision in Zigelstein, Justice Shelley went on to say that even if an adverse possession claim is possible, for it to succeed, it is likely that the actions of one tenant in common would need to arise to the level of something akin to ouster. Not wishing to make use of the property does not equate to an intention to abandon ownership.
Justice Shelley dismissed the appeal, stating that Verhulst’s indifference arose out of his intended use of the parcels of land as an investment vehicle, and was not an indication that he had given up possession or an ownership interest.
Find this topic helpful? Please also consider these related Hull & Hull LLP Blogs:
- Joint Tenancy, Survivorship and Adverse Possession
- Severance of a Joint Tenancy by Course of Dealing
- Partition and Sale
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Partition and sale can become an issue in an estates context when the family cottage or other real property is gifted to the testator’s children as joint tenants or tenants in common and some of the siblings wish to be bought out of their interest.
Pursuant to the Partition Act, an application may be made to the Ontario Superior Court of Justice by anyone who has an interest in land. Where the land is held by joint tenancy or tenancy in common by reason of a devise or an intestacy, an application cannot be made until one year after the death of the testator or person dying intestate who owned the land. (See Partition Act, s. 3(2)).
Joint owners have a prima facie right to partition and sale but the Court has jurisdiction to refuse such an order. In particular, the Court has discretion to refuse partition and sale where there has been malicious, vexatious or oppressive conduct by the party seeking an order to partition. The Court does not have jurisdiction to order one joint owner to sell to another i.e. force a right of first refusal. (See Osborne v. Myette, 2004 CanLII 7051 (ON S.C.))
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